A case of fraudulent issuance of bonds by a construction company

The issuer of corporate bonds shall strictly abide by the securities law, the measures for the administration of corporate bond issuance and trading and other laws and regulations, strictly abide by the bottom line of integrity and issue bonds according to law.

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In September 2018, a securities company and an accounting firm providing intermediary services for the issuance of two bonds of the company were filed for investigation by Zhejiang securities regulatory bureau.

In July 2018, the CSRC made an administrative penalty decision and a market entry ban decision on the company’s suspected fraudulent issuance of corporate bonds and illegal information disclosure, ordered the company to make corrections, gave a warning and imposed a fine of 41.4 million yuan, warned the relevant responsible personnel and imposed a total fine of 2.54 million yuan, and imposed a lifelong market entry ban on chairman Chen.

The two bonds involved a total principal of 1.36 billion yuan, becoming the first case of default of new corporate bonds in China.

The construction company was suspected of defrauding the approval of public issuance of corporate bonds with false declaration documents.

Risk tip: the CSRC adheres to the law, comprehensively and strictly perform supervision, cooperates with judicial organs, investigates criminal responsibility, prevents financial risks, and maintains the stable and healthy development of the bond market.

In November 2019, the CSRC issued a written decision on administrative punishment to the securities company, resulting in a total fine of 19.07 million yuan.

In August 2017, a construction company failed to complete the resale of “15 certain bonds” and the payment of interest in the second year on schedule, which constituted a material breach of contract and triggered the cross default of phase II bonds.

Fixing Socket Waved End

When preparing the financial statements for public issuance of corporate bonds from 2012 to 2014, it violated the accounting standards by falsely reducing enterprise accounts receivable and accounts payable, Less provision for bad debts and more profit.

In January 2019, the CSRC issued a written decision on administrative punishment to the accounting firm, fined and confiscated a total of 2.4 million yuan, and banned two certified public accountants from entering the securities market for five years.

In recent years, with the rapid development of the credit bond market, the “rigid cashing” of bonds has long been broken, and the debt default rate continues to rise.

In the process of undertaking corporate bond business, bond underwriters, accounting firms and other intermediaries shall earnestly perform their due diligence obligations, improve their risk awareness and compliance awareness, and give full play to the role of “gatekeeper” in the capital market.

Bond investors should invest in bonds according to their own asset status and risk tolerance and with a full understanding of bonds.

Two persons were fined 250000 yuan and their professional qualifications were revoked, and three other responsible persons were fined 150000 yuan respectively.

In January 2018, the CSRC issued the prior notice of administrative punishment to the construction company and relevant responsible persons.


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